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Chinese fighter jet rattles Australian plane. Beijing to roll back Covid restrictions. US considers lifting tariffs. Here's what you need to know today.

President Joe Biden's commerce chief said it "may make sense" to lift tariffs on some goods as a way to tame the hottest inflation in almost four decades. Gina Raimondo said while steel and aluminum tariffs would stay to protect the US steel industry, the administration was looking at the possibility of lifting duties on other goods, imposed by Donald Trump. Meanwhile, as the US prepares to ban all goods from the remote Chinese region of Xinjiang over human rights abuses, Xi Jinping is moving to rebrand the region and better integrate it with the rest of China — and the world.

Australia's central bank is poised to implement back-to-back interest-rate increases for the first time in 12 years on Tuesday, economists and traders predict. The key question now is by how much? Here's what economists and banks think. The RBA began tightening in May following a sharp acceleration in inflation, bringing it in line with peers like the Federal Reserve and the Bank of England. Meanwhile, "Team Transitory" — the tag given to everyone who expected pandemic price-spikes to be short-lived — still hasn't given up hope that the shock will soon fade, as supply blockages ease and energy costs stabilize. They're warning that big rate hikes are a big mistake.

Stocks are poised to start the week under pressure after a robust US jobs report left the door open for the Federal Reserve to maintain an assertive stance on inflation. Investors are fretting that a restrictive Fed could plunge the US economy into recession. While the jobs report quelled some concern that the economy is slowing too sharply, it strengthened the view that the Fed will keep hiking rates to douse inflation. Futures fell in Japan and Australia. Chinese shares traded in the US declined, which may weigh on stocks in Hong Kong.

Beijing will continue to roll back its Covid-19 restrictions on Monday, after declaring at the end of last month that the latest outbreak of the virus was under control. The city will resume public transport in most districts, allowing workers to return to their offices and restaurants to restart dine-in services. The loosening comes after officials said on Friday that the city had achieved zero new community cases in 13 out of 16 districts for seven consecutive days. Hong Kong reported 515 new Covid infections on Sunday, its highest daily case count in six weeks. But health officials said there had been no change in the number of hospitalizations and serious infections.

Australia said one of its surveillance planes was cut off by a Chinese fighter jet in international airspace over the South China Sea in the latest encounter between the militaries of the two countries. The RAAF P-8 aircraft was undertaking routine maritime surveillance activity on May 26 when it was intercepted by a J-16 fighter aircraft that "resulted in a dangerous maneuver which posed a safety threat" to the P-8 and its crew, the Department of Defence said in a statement Sunday. The J-16 fighter had flown "very close to the side" of the P-8 aircraft, Australian Defence Minister Richard Marles said, adding that the Australian aircraft and crew had been placed in jeopardy.

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Much like a Saturday night variety show, today's stock market leading indicators have something for everyone in the audience. Three key gauges for US equities — semiconductors, small caps and transport shares — each show a mixed picture of relative performance, suggesting the current period of choppy trading is likely to continue. All three cohorts are sensitive to the underlying economy, which make them useful measures of direction in the stock market. When they rolled over at the same time earlier this year it presaged the slump in equities. Bulls will be pleased to see semi stocks breaking out of their year-to-date downtrend, amid anecdotal evidence the chip crunch is easing and demand staying strong.

Still, small caps remain mired in their downtrend which will bolster the case for bears — they are not only sensitive to economic growth concerns but also worries about liquidity and volatility. And transport shares — a long time leading indicator for the broader market — look trendless, offering little insight to traders. Overall the gauges reflect the mixed feelings in the global stock market, with investors deeply suspicious about any tentative rally but unwilling to bet big on a return to fresh lows.

Cormac Mullen is a Deputy Managing Editor in the Markets team for Bloomberg News in Tokyo.

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